Credit Score Scale Drop For US As S&P Downgrades Credit Score Range
In the credit score scale, a triple A has been the preserve of the US economy since it began. Yesterday S&P downgraded it to the next rung in the credit score range, AA+
S&P, or Standard and Poor to give it it’s full title, are one of the worlds leading credit rating agencies and it’s no wonder that the unprecedented move of pulling the US down the credit score scale has caught world wide attention.
The company have cited the fact that the deficit reduction plan passed this week did not go far enough to halt the slide down the credit score scale.
Sliding down the credit score scale really matters in the financial and investment worlds. An AAA rating for a country means that it is effectively classed as a risk free borrower.
A downgrading on the credit score range says loud and clear that the risk has increased that the US may one day have difficulty in paying back it’s borrowings.
For the man in the street, local official bodies and the Government itself this move could trickle down into higher interest payments.
The other major credit rating agencies said that they had no plans at present to follow the downgrade and Washington bit back saying that the S&P financials were deeply flawed.
An unnamed source was being quoted by media agencies yesterday saying that a Treasury official had found a $2 trillion mistake in their sums. So far no one at the Treasury has elaborated.
One my also argue that credit rating agencies and their credit score scale are a fools undertaking anyway. The sub prime products that created much of the present mess in the US were rated AAA by S&P for instance, we all know how good they turned out to be.
Credit Score Scale From S&P
“A credit rating is Standard & Poor’s opinion on the general creditworthiness of an obligor, or the creditworthiness of an obligor with respect to a particular debt security or other financial obligation.”
Credit Score Range
AAA e.g. France, Germany, UK, Canada, Denmark, Austria, Australia
AA+ e.g. USA, Belgium
AA e.g. Bermuda, Abu Dhabi
AA- e.g. China, Aruba
A e.g. Czech Republic, Ras Al Khaimah
Source: S&P foreign ratings